Blue Sky opens books to Australian regulator as shares hit new low

The asset manager told the ASX today it had received a section 33 notice from the Australian Securities and Investments Commission.

Blue Sky Alternative Investments has revealed it has received a notice to produce documents from the Australian Securities and Investments Commission in June.

In a statement to the ASX this morning (July 2), Blue Sky confirmed it had received a section 33 notice from ASIC on June 30, which compels the company to hand over its books and other materials.

The notice covers the period from January 1, 2016 to June 12, 2018 and requests information for the purposes of ensuring compliance with section 674 of the Corporations Act 2001, which covers continuous disclosure obligations.

Blue Sky made the revelation following a report published in the Australian Financial Review that the company had received a section 33 notice. The company defended the lack of disclosure of the notice by saying it had been marked by ASIC to be ‘Treated as In Confidence.’

A company source told Agri Investor that LPs with investments in Blue Sky had already been told about the existence of the section 33 notice.

In the statement, Blue Sky said: “The ASIC notice states that it should not be construed as an indication by ASIC that a contravention of the law had occurred, nor a reflection on any person or entity.”

Blue Sky also confirmed it had self-reported two breaches to ASIC relating to its EC2010 Fund, a private equity fund focused on Australian SMEs. It told ASIC on May 30 about a breach in the fund’s lending limits, with investors informed on June 12. It then reported to ASIC on June 28 a further breach related to the misstatement of dividend imputation credits in relation to 2013 distributions, which would “be advised to EC2010 Fund investors at the next immediate opportunity.”

Both breaches “did not result in any loss to EC2020 Fund investors,” Blue Sky said.

Investors reacted negatively to the news today, with Blue Sky’s shares closing down 14 percent at A$1.46 ($1.08; €0.92), the lowest since US short-seller Glaucus launched its attack.

Blue Sky said it had first offered its full assistance to ASIC on April 3, including complete access to all relevant materials relating to all matters referred to by short-seller Glaucus in its scathing report. Glaucus published its initial report on March 23, which accused Blue Sky of overexaggerating the value of its fee-earning assets under management and for what it deemed to be “extortionate fees” for investors.